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Marine Builders’ Risks – 08.11.13

Marine Builders’ Risks – 08.11.13. Knut M. Finckenhagen Vice President, Gard AS. Imaging waking up in the morning, putting on your slippers and walking out in the kitchen to put on the kettle ... ... then you look out the window to see what the weather is like. Today’s topics.

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Marine Builders’ Risks – 08.11.13

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  1. Marine Builders’ Risks – 08.11.13 Knut M. Finckenhagen Vice President, Gard AS The Nordic Association of Marine Insurers

  2. Imaging waking up in the morning, putting on your slippers and walking out in the kitchen to put on the kettle ... • ... then you look out the window to see what the weather is like ... The Nordic Association of Marine Insurers

  3. The Nordic Association of Marine Insurers

  4. Today’s topics • A brief look at the international shipbuilding market • The need for buying Builders’ risks insurance • Builders’ risks insurance • Cover • NMIP, Chapter 19 • Case study – Westland Shipyard vs. SMIL The Nordic Association of Marine Insurers

  5. A brief look at the shipbuilding market

  6. Asia on the move

  7. Global orderbook by cgt – 2013(Sept. 2013) The Nordic Association of Marine Insurers

  8. World shipbuilding supply & demand The Nordic Association of Marine Insurers

  9. The need for buying Builders Risks insurance The Nordic Association of Marine Insurers

  10. Builders’ Risks Insurance • Builders’ risks insurance which covers newbuildings, • from “keel laying” to delivery, including sea trials. • Insurance coverage of conversions and rebuilding The Nordic Association of Marine Insurers

  11. Wordings • Standard wordings on “all risk” basis • ICBR 1/6/88 - Institute Clauses for Builders’ Risks • The Nordic Marine Insurance Plan of 2013, Ch. 19 • Local wordings: • Dutch Bourse Policy for Construction Risks 1947 (1995) • German Marine Insurance Conditions for Shipbuilding Risks 1998 (amended 2004) • American Institute Builder’s Risk Clauses • Marcar 1/9/07 – “New” English builders risks clauses

  12. We have a Plan!! Providing cover……….

  13. Place of insurance (19 – 5) • In the builder’s yard • Other premises? • What about transports? The Nordic Association of Marine Insurers

  14. What is included in the coverage (19 – 9) • The ”subject matter insured” itself • The cost of planning and drawings • Components, equipment and materials delivered and while at the yard’s premises • Buyers equipment/material delivered and while at the yard’s premises (OFE) • Bunkers and lubricating oil on board (sea trials) • Bunkers Blue Card (BBC) The Nordic Association of Marine Insurers

  15. Insurable value (19 – 10) • FCV – Final Contract Value • Construction work • Additional work (changes) • Owner Furnished Equipment (OFE) • Yard profit The Nordic Association of Marine Insurers

  16. Insurance period (19 – 2) • When does the insurance really starts? • Keel laying • Signing of the contract • ‘First cutting of steel’ • Value exposure at the yard • Start of engineering work • At launching The Nordic Association of Marine Insurers

  17. Insurance period (19 – 2) cont. • When does the insurance stops? • Time of delivery as per the Shipbuilding Contract • Delivery to buyer at a specific agreed location • What about extensions? • Automatic extension at additional premium The Nordic Association of Marine Insurers

  18. The cover – Nordic Plan • Perils covered (all risk basis) • Physical loss & damage (19 - 14)-(ch. 12) • Faulty design (19 – 15) • Launching (19 – 18) • Removal of wreck (19 – 19) • Collision liability (19 – 20) • Protection & Indemnity (19 – 20) • Total loss (19 – 11) • Sea trials (19 – 5) • Escalation (19 – 7) • Towage (19 – 27) • War risk (19 – 30) The Nordic Association of Marine Insurers

  19. Additional premium creators • Value increase/decrease • Period extensions/early delivery • Tows • Delay insurance • Guarantee periods • Delivery voyages • War insurance (from waterborne)

  20. Let us hope the insurance will be a success!!!! • Launching at Niestern Sander - 2008 The Nordic Association of Marine Insurers

  21. …….a success for whom??? The Nordic Association of Marine Insurers

  22. Case study – Westland Shipyard vs. SMIL • Situation • Westland subcontract paintwork of potable water tanks to Goodpaint AS • Goodpaint AS is adding thinner to the paint • Remove paint and repaint the potable water tanks • Westland have builders risk policy in force with SMIL • Newbuilding insured under NMIP 1996 (version 2010) • Claim submitted: NOK 5mill. • Evaluation • Claim recoverable (fully or partially) or not? • Refer to clauses in NMIP to support your answer The Nordic Association of Marine Insurers

  23. Main issues to consider • Damage? • Peril - causation? • Loss recoverable? The Nordic Association of Marine Insurers

  24. The Nordic Association of Marine Insurers

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